Iron ore

Looks at PMI for China, in comparison to rest of world.

Looks at China % of seaborne iron ore market.

Checks iron ore price.

Closes laptop.

On a more serious note, it does remain confusing. Absolutely, China will, and by all accounts is, stimulating, to try and shore up growth against a deteriorating back drop in the property sector, for one, and more broadly, as COVID lockdowns bite, for two.

However, that would make sense for an iron ore price that was recovering from some sort of a sell-off, not one that is pressing near all time highs!

I’ll have another go at that. It is fine to be bullish iron ore on stimulatory new news, if the bad news re: the economic performance has shown up in the data.

And I agree, you could see that iron ore is not in fact at record highs, rather $230tn was the high, and so it is behaving exactly as I outline above, recovering from a selldown. To which we’d suggest that $230 was pure madness, highly speculative, and that $100tn is the better base, at which well over 90% of the industry is still profitable, to compare “what marks a recovery and what doesn’t”.

So, still highly cautious metals and mining, unsurprisingly, in our direct equity portfolios. We’ve still got BHP, but we will probably always have some BHP given the enormous weight in the index.

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